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Investor lending picks-up in June

Cameron Kusher    |    International

 

The Australian Bureau of Statistics released housing finance data for June 2016 earlier this week. The data showed that the value of housing finance commitments was recorded at $32.6 billion which was the highest value since August 2015 but still -2.1% lower than its record high of $33.3 billion in April 2015.

Looking at the split between owner occupier and investor lending in June, there was $20.8 billion worth of lending to owner occupiers and $11.8 billion to investors. The value of owner occupier lending was 1.8% higher over the month, 9.4% higher year-on-year and at its highest level since February 2016. The $11.8 billion in lending to investors was 3.2% higher over the month, -13.1% lower year-on-year but at its highest level since August 2015.

Value of new lending

Based on the four components of owner occupier lending, there was: $1.8 billion in lending for construction of dwellings, $1.0 billion for purchase of new dwellings, $6.9 billion in refinancing of established dwellings and $11.0 billion for purchase of established dwellings. Owner occupier housing finance commitments were higher over the month for each component except for construction of dwellings. Each component of owner occupier lending has increased year-on-year.

Value of new lending

The $11.8 billion worth of lending to investors was comprised of $1.8 billion worth of commitments for construction of dwellings and $10.6 billion for established housing. Over the month, the value of commitments for construction of dwellings was -1.4% lower and commitments for established dwellings were 3.8% higher. Year-on-year the value of commitments for construction of dwellings were 20.5% higher and commitments for established dwellings were -15.8% lower.

Value of new lending

Some interesting trends have emerged over recent months. After recently falling there has been a rebound in both owner occupier and investor lending however, both remain below recent peak levels. While owner occupier lending has picked-up, refinances have flattened out. Keep in mind that this data is to June and following recent interest rate cuts which weren’t passed on in full, it is reasonable to expect that refinance might pick-up again from August. In terms of investment lending, despite an uptick it is still much lower than its peak level. With investment housing credit increasing at an annual rate of 5%, well below the 10% speed limit, we may see a further increase in investment lending over the coming months given that lenders are now comfortably below the 10%pa speed limit.

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